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The constitution of the kibbutz is loaded with behavioral constraints which, under normal micro-economic assumptions, should lead the kibbutz economy to intrinsically inefficient performance, in the sphere of consumption as well as in the sphere of production. Phenomena such as the provision of consumers' goods and services at a zero price would, in the "normal" utility maximizing environment, result in a highly inefficient and wasteful utilization of those consumer goods. In parallel, production in a system without "normal" controlling devices and without remuneration in accordance with contribution, should lead to phenomena of "free riders" and to diminution of competitiveness on the market place. Empirical observation of the economic performance of the kibbutz, up to the mid eighties suggested, however, that this was not the case. The article raises the thesis that the reason for such a deviation of the empirical observations from the anticipations, in accordance with the standard economic theory, can be explained by the existence of strong altruistic elements in the utility function of the typical kibbutz member. Such a utility function implies that the individual is capable to derive utility not only from the possession of goods and services for himself, but also from his fellow kibbutz members' material welfare. If such altruistic elements are present in the preference patterns of the kibbutz members, the kibbutz constitution need not diminish the competitive edge of the kibbutz production, but, on the contrary, it may even enhance overall economic efficiency. One of the principal reasons for the economic decline of the kibbutzim in the last two decades seems to be the gradual disappearance of the altruistic motivations from the behavior of most kibbutz members, and the substitution of that unique "irrational", altruistically loaded, atmosphere by "normal" utility maximizing attitude to the kibbutz.


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